SINGAPORE (Aug 7): Kimly, Singapore’s largest traditional coffee shop operator, posted earnings of $5.2 million for the 3Q17 ended June, down 20% from its $6.5 million in earnings for 3Q16 due to higher expenses.
Revenue for the quarter grew 8.5% to $47.9 million, boosted mainly by higher sales generated from cooked food and beverages, an increase in rental income, as well as income from provision of cleaning and utilities services.
However, due to an increase in staff costs and a 27.3% rise in operating lease expenses to $8.3 million, linked to the group’s expansions of its operations, gross profit for the quarter slipped 6.7% to $8.8 million from $9.5 million a year ago.
Selling and distribution expenses rose 8.8% to $0.7 million in line with the revenue increase, due to higher packing materials and other expendables.
At the same time, administrative expenses for the quarter spiked 20% to $2.9 million as a result of increased employee benefits expenses for corporate headquarters and management personnel; incentive bonus; and depreciation expenses.
After its initial public offering (IPO), Kimly’s tax expenses increased by $0.4 million to $0.7 million in 3Q17 from a year ago, mainly because tax relief and partial tax exemptions for the latest quarter were available to a smaller number of entities within its structure, subsequent to the group’s restructuring exercise.
Looking ahead, the group expects its operating environment to remain challenging due to a lack of suitable manpower, as well as continued stiff competition within the food and beverage (F&B) industry.
“To stay ahead of competition, besides prudent cost management and increasing productivity and efficiency, we will continue to push forward our e-commerce efforts by implementing cashless payment systems at the food outlets and extending our online food offering and delivery system,” says Vincent Chia, executive director of Kimly.
“At the same time, we will expand the network of food stalls and refurbish existing food outlets as part of our ongoing plans,” he adds.
Shares in Kimly closed flat at 38 cents on Monday.